Heterogeneous Trade Interests and Conflict: What You Trade Matters

Peer-reviewed Journal Article

Empirical studies on trade and conflict generally make use ofhighly aggregated data. There are, however, good theoreticalarguments to suspect that trade in some goods should have abigger impact on the likelihood of conflict than trade in others.This article examines the relationship between trade and conflictat a lower level of aggregation. It discusses various theoreticalarguments why the relationship between trade and conflict shouldvary across industry sectors, particularly strategic trade,asset specificity, and possible appropriation of gains fromtrade. The central hypotheses are tested using dyadic UnitedNations trade data disaggregated at industry level from 1970to 1997. The main findings are that trade generally reducesthe likelihood of conflict, the relationship is weaker for commoditiesthat are more easily appropriable by force, and the relationshipis generally stronger for manufactured goods with the notableexceptions of chemical and metal industries and the high-technologysector.